When a Compensating Control Exists, a Deficiency in the System

question 19

Multiple Choice

When a compensating control exists, a deficiency in the system:

• A) is magnified and must be removed from the sampling process and examined in its entirety.
• B) could cause a material loss, so it must be tested using substantive procedures.
• C) is reduced but not removed; therefore, it is still of concern to the auditor.
• D) is no longer a concern because the potential for misstatement has been sufficiently reduced.